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American Motorists Ins. Co. v. Gould

Supreme Court of Connecticut

February 6, 1990

Karen Lathrop GOULD.

Page 1106

Argued Nov. 3, 1989.

Page 1107

Michael Brodinsky, North Haven, for appellant (plaintiff).

Kathleen S. Mass, Hamden, for appellee (defendant).


[213 Conn. 626] SHEA, Judge.

The plaintiff American Motorists Insurance Company brought this application to vacate an arbitration award made to the defendant Karen Gould, pursuant to the compulsory arbitration provision of General Statutes § 38-175c(a)(1) [1] and based upon the [213 Conn. 627] uninsured motorist coverage afforded by the automobile liability policy issued by the plaintiff. The trial court denied the application, rendering judgment for the defendant. In its appeal the plaintiff insurer raises two questions involving the construction of § 38-175c, our uninsured motorist coverage statute, and of the uninsured motorist provisions of the policy: (1) Is a tortfeasor's vehicle "underinsured," as that word is defined by § 38-175c(b)(2), when the aggregate limits of his liability insurance coverages applicable at the time of the accident exceed the uninsured motorist coverage available to the insured? and (2) When an insurance policy provides that its limit of uninsured motorist coverage shall be reduced by the amounts paid for bodily injury under the liability part of the policy, does this reduction apply only to the amounts received by the insured from the tortfeasor's liability carrier or does it also include payments made to other accident victims? We answer "No" to the first question and discuss the second only in relation to the first.

The facts are undisputed. On August 31, 1984, the defendant and three other persons were passengers in an automobile being driven by Wesley Bamford when [213 Conn. 628] it was involved in a one car accident. All four passengers were injured. The plaintiff had issued a policy affording $100,000 of liability insurance coverage for the Bamford vehicle. An additional $40,000 of liability insurance for the accident was provided under an excess policy issued

Page 1108

by Chubb Insurance Company. The total of $140,000 of liability insurance was made available to the four injured passengers and was allocated among them pursuant to an agreement by which the defendant received $21,000, 15 percent of the total.

The policy issued by the plaintiff on the Bamford vehicle also provided $80,000 of uninsured motorist coverage. [2] Under policies issued by Nationwide Insurance Company on vehicles owned by other members of the defendant's family, an additional $40,000 of uninsured motorist coverage was available to her. The defendant submitted her uninsured motorist claim to arbitration pursuant to § 38-175c(a)(1). The arbitrators found that the defendant had sustained damages of $35,000 and, after deducting the $21,000 she had previously received, awarded her $14,000. Of this amount, $4666.67 was ordered to be paid by Nationwide [3] and $9333.33 by the plaintiff.


Section 38-175c(a)(1) requires insurance, designated as "uninsured motorist coverage," for protection against operators of uninsured and underinsured motor vehicles, as well as insured motor vehicles whose insurers become insolvent. Thus, statutory provisions relating expressly to uninsured motorist coverage apply also to underinsured motorists.

[213 Conn. 629] Section 38-175c(b)(2) [4] defines an "underinsured motor vehicle" as "a motor vehicle with respect to which the sum of the limits of liability under all bodily injury liability bonds and insurance policies applicable at the time of the accident is less than the applicable limits of liability under the uninsured motorist portion of the policy against which claim is made under subdivision (1) of this subsection." [5] The plaintiff insurer claims that, because total liability insurance of $140,000 for Bamford was available to all the victims of the accident, an amount exceeding the defendant's uninsured motorist coverage limit provided by the Bamford policy of $80,000, [6] the automobile involved was not "underinsured" according to this definition. [7] The defendant

Page 1109

maintains, however, that the phrase, "limits of liability[213 Conn. 630] under all ... insurance policies applicable at the time of the accident," refers to the amount of liability insurance available to satisfy the claim of a particular claimant, which for her was only $21,000. The trial court agreed with the defendant that § 38-175c(b)(2) required "a comparison of the policy amounts applicable to the claimant to those available under her underinsured motorist coverage." (Emphasis in original.)

We have declared that § 38-175c(b)(2) "mandates that, in determining whether a motor vehicle is 'underinsured' for purposes of § 38-175c, the aggregate of the limits of all such bonds and policies on the tortfeasor's motor vehicle is compared against the amount of uninsured motorist coverage of the insured." (Emphasis in original.) American Universal Ins. Co. v. DelGreco,205 Conn. 178, 194, 530 A.2d 171 (1987). "If the aggregate is less than the limits of liability in the uninsured motorist portion of the insured's policy, then the underinsurance coverage is activated." Id. Under the DelGreco analysis of ยง 38-175c(b)(2), the Bamford vehicle would not have been "underinsured," because total liability insurance of $140,000 was available, a sum substantially in excess of the defendant's uninsured motorist coverage of $120,000 under both the Bamford vehicle policy and the Nationwide policy. The trial court distinguished DelGreco, however, because that ...

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